Stock futures are rising after the S&P 500’s worst week since March 2020

Trades on the floor of the NYSE, January 21, 2022.


Stock futures rose slightly overnight on Sunday, following the S&P 500’s worst week since March 2020, as investors waited for more corporate results and an important Federal Reserve political decision.

Futures on the Dow Jones Industrial Average rose 1[ads1]20 points. S&P 500 futures rose 0.5% and Nasdaq 100 futures rose 0.9%.

The overnight operation followed a brutal week on Wall Street in the face of mixed corporate revenues and concerns about rising interest rates. The S&P 500 lost 5.7% last week and closed below its 200-day moving average, a significant technical level, for the first time since June 2020. Blue-chip Dow fell 4.6% for the worst week since October 2020.

Sales in the technology-heavy Nasdaq Composite were even more serious with the benchmark index falling 7.6% last week, giving its fourth weekly loss in a row. The index is now more than 14% below the record in November, and falls deeper into the correction area.

The profit season for the fourth quarter has been a mixed bag. While more than 70% of the S&P 500 companies that have reported results have topped Wall Street estimates, a couple of key firms failed investors last week, including Goldman Sachs and Netflix.

“What was initially a stimulus-driven decline changed last week to include revenue turmoil,” said Adam Crisafulli, founder of Vital Knowledge, in a note. “So investors are now worried, not just about the multiple placed on earnings, but the EPS forecasts themselves.”

IBM is set to report numbers after Monday. Investors will also digest a range of high-tech Big Tech incomes, including Microsoft, Tesla and Apple.

Another important market driver will be the Fed’s political meeting, which ends on Wednesday. Investors are eager to find out any signals about how much the central bank will raise interest rates this year and when it starts.

Goldman Sachs said on Sunday that the baseline forecast requires four interest rate increases this year, but the bank sees a risk of more interest rate increases due to the increase in inflation.

Investors are dumping more risky assets this year as they prepare for the Fed to tighten monetary policy. Bitcoin fell more than 8% over the weekend to trade around $ 35,511 apiece, wiping out almost half of its value at a record high in November.

Meanwhile, bond yields have risen in the new year in anticipation of interest rate hikes from the Fed, which in part triggered the drastic sale of growth-oriented technology stocks. While the 10-year government interest rate ended last week lower at around 1.76%, the reference rate has jumped by about a quarter of a percentage point in 2022.

“The big story so far in 2022 has been the rapid rise in interest rates, prompting investors to reassess valuations for some of the most expensive segments of the market and rotate to value stocks,” said David Lefkowitz, head of equities Americas at UBS Global Wealth Management.

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